The Selection of an Appropriate Inventory Cost Flow Assumption for an Individual

question 160

Multiple Choice

The selection of an appropriate inventory cost flow assumption for an individual company is made by

• A) the external auditors.
• B) the IASB.
• C) the internal auditors.
• D) company management.

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Definitions:

Produced

The completed output of goods or services as a result of manufacturing or production processes.

Materials Price Variance

The difference between the actual cost of materials used in production and the expected (or standard) cost of those materials.

Direct Materials Quantity Variance

The variance between the real amount of materials consumed in production and the anticipated standard amount, multiplied by the cost per unit according to standards.

Direct Materials

Raw materials that can be directly attributed to the production of specific goods or services in a manufacturing process.